SIMON BIRMINGHAM: Thank you to the ACPET team, to Mel and the board members and representatives of different companies who are present here today. To our hosts from [indistinct] in education, thank you very much for having us here, and for the showcasing of the wonderful work that you do and that you’ll undertake with me shortly.
To our regulators, Michael and Lynn, welcome and thank you for coming along and joining us as well.
Ladies and gentlemen, I come from a background of work over the years, both in my pre-parliamentary career and my parliamentary career, working in the hotel industry with hotel operators and owners, in the wine industry with irrigators and water users, in the environment portfolio with miners and developers and businesses, all of whom need some form of environmental approval.
And the common thread between all of those different industries in different roles I’ve had with them is that to continue to succeed, to continue to operate in a free and competitive marketplace, and to be able to undertake development in the business activities they pursue, all of them need a strong social licence to operate. All of them require strong support of the community in which they are doing business to be able to keep doing the business they seek to undertake. All of them are in some way, and for all industries that are in some way, reliant upon government regulation, government approvals, government funding. All at their heart rely upon that notion of the social licence to operate, because ultimately, the decisions of governments will be driven and informed and responsive to the perceptions of the community that elects those governments.
Initiatives like that being undertaken today, the launching of the codes of practice and the ethical standards by ACPET, are absolutely critical to maintaining these types of social licence to operate. It is absolutely essential to ensure that your industry, your businesses, do maintain standards and ethics and practices that mean you maintain community support, and therefore government support, to be able to do the work that you do.
We should be under no illusion that the reforms you have undertaken, complemented by the reforms we at a governmental level are undertaking — and not just at the Federal Government level — are welcome, they are necessary, and in some ways they are overdue in terms of ensuring that we do have that strong social licence to operate in place.
The social licence to operate of non-government training providers, especially in the for-profit sector, is under some level of threat. We’re seeing now in the third consecutive state election around Australia, the Labor opposition seeking to juxtapose private operators against public operators, to run a campaign that TAFE is good, and therefore, join the dots, all the rest must be bad.
We have a Greens campaign being run through a Senate inquiry at present, to basically campaign on the basis that we should eliminate all forms of non-government funding for education. Now that is of course at the heart of the Green philosophy, to eliminate anything that isn’t completely centralised within the bosom of government as such, but they are certainly going after this sector in particular at present.
And as we look at what’s happening in terms of that threat to the social licence, we need to acknowledge and be honest — and I think the industry is doing that through the actions that are being taken today — that some elements of the industry, some rogue elements of the industry, have brought some of these questions, some of these enquiries, onto themselves, and unfortunately in doing that, they have not only brought those questions and issues onto themselves, they have brought the issue onto the broader industry collectively.
Questions and issues and arguments around price gouging, profiteering, the targeting of vulnerable people, allegations around the erosion of quality. Unfortunately as a new Minister, stepping into this portfolio less than three months ago, I’ve faced a bit of a barrage of questions around all of these types of allegations and we’ve seen far too much in terms of negative media commentary that is starting to hurt the reputation of the entire training sector.
Governments, state and federal, equally need to acknowledge that we have contributed to this problem. Rod [Camm, CEO ACPET] made this point in his opening remarks. The design of some of the reforms of recent years has created a situation which has almost invited rogue elements to come into the sector. The design of some of the opening up of contestable frameworks in states like Victoria, two governments ago now in their original guise, was inadequate in areas of its operation. There is no doubt that the changes to VET FEE-HELP undertaken by the previous federal government, when the linking to credit transfers with universities was removed, was woefully inadequate. That it did basically put a giant honeypot on the table with a ‘Bees welcome here’ sign attached above that really has encouraged a whole lot of activity, especially in the brokerage sector, especially by third party operators. But of course they are doing that to some extent, always encouraged by some training providers. They are not operating completely independently of the sector.
So we must all accept that there is a level of responsibility there, and of course we all realise that it only takes a few rotten apples to sour the barrel and that is the problem that we are confronting at present. Just how many rotten apples there are is of course a matter for debate. It’s clear that there is though, and has been, especially in the VET FEE-HELP sector where I announced reforms yesterday, a lot of rotten and unethical activity. And this is doing reputational damage, as I said before, to the industry and in doing that reputational damage and creating that harm, it is threatening the social licence to operate of the many very good, high quality training providers who have done so much over a very long period of time to contribute to the effective training and delivery of skills across the Australian economy.
Now from my perspective, and the perspective of the Federal Government, your social licence to operate is worth defending. It is worth fighting for and it is something that we will do our best to ensure that, where we can, we are living up to our end of the bargain by ensuring that programmes are of sound design, incentives and funding have appropriate regulation around them and standards set and the adequacy of our regulation and our regulator are all of the highest level. But of course, we need the industry itself to live up to its end of the bargain as well.
Now my view and the Government view that this is an industry worth protecting, encouraging and growing, is not because of any philosophical bias to a view that private is best, because I want to say very clearly here that TAFE has an incredibly valuable role in the system. I look forward to having a very strong relationship with ACPET, private providers, with TAFE directors and their members, and with community colleges and not-for-profits, because each complements each other through the system and each helps to drive, when operating at its best, higher quality throughout the system.
It is worth defending the social licence of private providers because choice should improve outcomes, because competition should improve quality, because having a degree of contestability should improve value for money.
And we have to make sure, together, as the three different components of industry, government, public, profit and not-for-profit, working with state and federal governments, that we get all the settings right, to actually have the best value for money, the best quality and the best job outcomes from our training sector.
We know from some of the early research into the waves of contestable frameworks that were applied in recent years — research undertaken by the Melbourne Institute and the University of Melbourne — that working effectively at its best, you can get better completion rates by having a contestable framework in place. That you can see students making wise choices, better informed choices, to pursue enrolments in higher value or higher wage occupations. That you actually will see a level of responsiveness by an informed marketplace towards areas of skills shortage and to delivering what employers need, and what employees or students should be seeking, and that of course is ultimately a job at the end of the course or improved employment prospects throughout their career.
One of our ambitions, as the Federal Government is to make sure we create a better informed marketplace. Because for contestability to work, for competition to work, you do need to make sure that students and their families and those who are making choices about what course to study, and where to study, and how much to pay, and how long is long enough to actually learn all the competencies and skills associated with a course or occupation, actually have sufficient comparative information, sufficient comparative data up front to be able to make an informed choice and an informed selection about where to go.
So through the total VET Activity Reporting Framework the NCVER is working with us on rolling out, through the opportunities that the Unique Student Identifier provide, we are — and through further advancement of the MySkills website — we are confident and hopeful and determined to make sure that over time, the marketplace is better informed and better able to compare each of your different training institutions of those represented in this room with the other choices from the other sectors not represented in this room, and it should be an informed student making an informed choice who determines where the training places go and where the dollars go, because they are seeking the best outcome for their future career. And that of course means that we need as I said before to make sure the programmes and policies, regulations and regulator are all in the right place to facilitate that optimal competitive marketplace and that optimal informed marketplace.
And I think that is very much consistent with what Ian Harper is talking about with his competition policy review which Rod of course spoke of before.
So as the Government, we have taken the challenge — of stepping up to the plate and improving the standards of the regulator, the regulatory settings, and the programme designs — quite seriously. This is not an approach that has just come about with my appointment to the ministry. My appointment into this role gives extra focus to what is happening, it ensures that at ministerial level there is dedicated attention to vocational education and training and skills. And that is because we want to, not just get the reforms in this space right, but highlight the opportunities and the positives and the advancement potential for individuals by participating in VET courses.
I look over the time prior to me taking on this portfolio. Minister Macfarlane when he was responsible turned around the direction of the previous Government that ASQA was to become self-funding, and has provided $68 million over four years in additional funding so that ASQA need not worry about so much how it levies fees or charges on each of your companies and others in the sector to pay its bills, but so ASQA can actually focus effectively on how it actually transforms itself to be an effective regulator that regulates on the basis of informed risk appraisals, and targets its audit and compliance activities where they are needed most in terms of those who are most likely to be doing the wrong thing.
Minister Macfarlane also introduced new regulations that took effect from the 1st of January for new RTOs and from the 1st of April for existing RTOs that particularly look at your relationship with brokers and with third party agents, and made sure that the rules are crystal clear that you have to have contractual arrangements, and those contractual arrangements must be disclosed, they must be public, and that students must know, ultimately when they are signing up for a course, who it is that is providing that course, what RTO is responsible for doing so.
Since coming into the portfolio, I’ve brought in new legislation that strengthens both of those aspects — the regulation relationship around brokers and the opportunities for ASQA. It provides you all with a wonderful opportunity to have an extra couple of years on your registration period. For those of who that operate in the university space, and that are regulated by TEQSA as well as ASQA, it means you can align your registration periods and reduce red tape costs.
But more importantly from my perspective, given the quality debate we’re having at present, that legislative change from five to seven years for re-registration, means that ASQA doesn’t spend as much time undertaking re-registration audits, where frankly, to be a little cynical, you all know, and more particularly, the dodgy providers who are probably not represented here know, that ASQA’s coming at the time of a re-registration. If you’re not ready for a re-registration audit, then frankly you’re a fool, because you’ve had five years under the existing framework and seven years under the new legislation to know that the audit is coming.
What we want ASQA to spend more time doing is absolutely applying an evidence-based, risk-based framework to be able to undertake audits where they think there are likely to be problems and to be catching those who might be undertaking dubious activities — that go against the spirit and the letter of the regulations — off-guard so that we can make sure that we are forcing everybody to maintain the highest possible standards.
And, of course, yesterday, as you would all know, I announced some reforms specific to VET fee help. Those reforms seek to knock out inducements, and make sure that up-front inducements and incentives are no longer on the table.
I recognise that the codes of practise launching today, we’re seeking to take steps very clearly in that direction. I applaud ACPET and the member bodies for seeking to move this way. I’ve felt, and the Government has determined, that it was necessary to draw a clear line in the sand in this space. This issue of, everything from the free Ipad to the cash giveaway and the meal vouchers, was becoming far too much of a problem and far too much of an incentive to target vulnerable Australians who were susceptible to a sales pitch of basically saying ‘you can get something for nothing’.
Well, we all know that’s not true, and the problem with the something for nothing sales pitch was that it was untrue, and that even if the person never had any intention of undertaking the studies, never had any intention or expectation that they would earn enough to pay back the debts that they were acquiring, there was a consequence for them in the impacts on their credit rating, and they would face the consequences through life that it was therefore a bit harder, to get their credit card or to get their car loan or to get their home loan.
Of course, there was a very real consequence for the taxpayer because if the loan was never repaid, and the person never got their qualification, then we never got either end of the potential public policy benefit. Ideally, we want the loan repaid, but most importantly, we want people to get the qualification, improve their employment prospects, have the opportunity to make a better contribution to national productivity, to grow more jobs in our economy, to not be on the dole or any form of welfare, and of course, if they happen to then also earn enough to repay the debt, then that’s an added bonus in terms of what happens.
So banning those upfront inducements. We want to make sure, equally, that for, and we have to remember, in this room, because many of you have also put in most of your effort into putting people though Cert. 1, 2, 3, 4, qualifications, but in the VET FEE- HELP space, we’re taking about a higher level diploma and advanced diploma.
We want to make sure, because I don’t think this is unreasonable, that it is impossible to levy all of the fees for an advanced course like that, upfront in a single hit. It should be multiple units of study and there should be a sequencing of the census dates around those multiple units of study to ensure that students who are not progressing have an opportunity to opt out or are opted out, if indeed they are transparently not progressing through. And in doing that, it will have some impact, I trust, on dealing with the miraculously short courses that a few people seem to have started promoting around the place.
In terms of our informed marketplace, our reforms will try to make sure that students are better informed at the point of sign-up for their loans. I was frankly astounded when I looked at the Commonwealth Assistance Form and realised that nowhere on the Commonwealth Assistance Form is there room for a dollar figure to go in. So a student, in agreeing to have a loan with the Commonwealth, whereby the Commonwealth and taxpayer pays the money to the training provider, never has to anywhere on that form say 'and this is what I expect the value of the loan to be'. So I've said to the department that I want the form redesigned, that it must have what the expected level of debt would be if the person were to proceed through all aspects of the qualification for which they are enrolling, and frankly if that can be done with some sort of red flashing light on the form, I'd be quite happy to see that occur as well.
We are equally wanting to make sure that the duty of care requirements and standards of those operating in the sector are strong. And so our reforms will take a look at the level of capital backing that RTOs should have to make sure we don't have shelf companies or fly-by-night operators, to make sure there is a positive history in the training market in the fields, preferably, in which the person is seeking to undertake that training. This will include a reappraisal of everyone currently registered for VET FEE-HELP.
I trust all those who are doing the right thing, who have a sound history, and who have a strong balance sheet and who aren't completely reliant purely on a model of taking Government income-contingent loans will happily fly through that reassessment period.
But we want to make sure it isn't easy for new people to come in and being able to simply set up a model that is based on student debts and Government funding.
As we undertake all of these reforms, I'm committed to getting them in place as quickly as possible but to making sure that we get the letter of them right as well. So the reforms that we'll be undertaking, in terms of banning inducements and incentives, I expect to have in place within a matter of days and no later than the first of April.
Others, such as putting in place some tougher penalty regimes and making sure that we have a better armoury of penalties at our disposal rather than simply the rather blunt alternatives we have at present which are either to send a letter saying 'lift your game or deregister'. In between, we need to have some financial penalties that guarantee if somebody has done the wrong thing we're able to penalise the company that's done the wrong thing without necessarily penalising the hundreds or thousands of students who they have registered and operating through their training providers who would be negatively impacted if we were to take the ultimate step of deregistration.
Part of those reforms, which will require legislating and therefore acquire a little bit later in terms of their legislation, will be to make it easier to waive student debts and recover the fees paid out associated with those debts where there have been transparent breaches of the VET FEE-HELP guidelines. I noticed when I sat down late last night to watch my recording of the ABC News, as I do when I rarely get home to Adelaide, that Rod had suggested that perhaps we could backdate some of these changes so we could have a look at some of the students that had been adversely affected. Well I'll throw an invitation out, Rod, and I'll look forward to the proposal from ACPET as to how that may occur in a way where the taxpayer is not disadvantaged, but the people who have received funding are the ones who foot the bill for reimbursing anybody who may have been treated unethically on the way through.
So ladies and gentlemen, I'm sorry if today has been a little bit of a lecture, in a sense, about standards and it's certainly perhaps not, when I was sworn into this portfolio on the 23rd of December, how I envisaged my first speech to the private training providers to go. But it is really critical that we are upfront and honest about the challenges we currently face and I applaud ACPET and its membership for being upfront and honest, for doing the work in relation to developing the codes that are being launched today, for in every one of my meetings and discussions, with Rod or your membership thus far, being honest in saying to me, something has to be done, reforms have to be undertaken, particularly in VET FEE-HELP, and that we have to make sure the sector is operating in a way where everyone has confidence that the operators in this sector are there for the right reasons. That people who are signing up for training are signing up for no reason other than they want high-quality training, rather than a free giveaway of some sort.
This is the type of approach that I’ll be taking throughout my time in this portfolio, to be frank and open with all of you. I look forward to visiting many of your colleges around Australia.
As I said before, it is my view that your social licence to operate, that contestable frameworks are worth fighting for, because the choice they provide and the competition they engender should give us the best of all worlds in terms of the highest quality training and the best value for money.
I look forward to working with my state ministers and state colleagues around the country of all their different political persuasions to try to make sure that they are sharing the learnings from their end of the system of how to make sure contestability works in a manner that also gives the best possible public policy outcomes. Because ultimately that’s what governments care about, the public policy outcomes which are that you, together with all the different elements of the training system are providing high quality training that meets the skills needs of our economy and ensures that the millions of Australians who undertake vocational education and training every single year, are getting the best possible training to equip them to secure a job, to improve their employment prospects, to contribute to a more productive economy, and ultimately a wealthier Australia.
So thank you very much for what I know you all do in contributing in that space, and I really do look forward to working with you and to working with you to shine a spotlight of positivity on what actually occurs through your many institutions and for the thousands and thousands or millions of Australians who do each year undertake vocational education and training and secure qualifications that are welcomed by industry, useful to employers and should be championed by all around Australia.
Thanks very much.